St. Louis Holds Competition To Attract Startups

Many cities are trying to attract startups. In St. Louis, the goal is to nurture the budding tech scene. To do that, the city sponsors a startup competition called Arch Grants - which awards 20 young businesses $50,000 a piece.

St. Louis Public Radio's Maria Altman reports.

MARIA ALTMAN, BYLINE: FoodEssentials has the typical startup vibe. The company gathers and organizes food label data for retailers and brands, like which products are gluten-free or are heart healthy.

(SOUNDBITE OF CHATTER)

ALTMAN: The co-founder Dheeraj Patri says they still need to figure out just where to put a foosball table and bar in their St. Louis offices.

DHEERAJ PATRI: So we're still moving in. I guess as a start-up we're always moving in.

ALTMAN: With 17 full-time employees and 30 part-time data collectors, Patri says they're a long way from the Chicago basement where they started. He beams as he points to a table covered with awards they've received since moving to St. Louis.

PATRI: It's really symbolic of what St. Louis has given us. I love Chicago, it's a great town, but we didn't get that support from Chicago, and we got that from St. Louis.

ALTMAN: FoodEssentials came here after winning an Arch Grant. It was part of the first class of the global startup competition in 2012 and got $50,000 and a year of free support services.

Since then, competition has given away nearly $2 million to 35 companies, on the condition that they agree to stay in St. Louis for at least a year.

Executive director Ginger Imster says unlike most business competitions, they don't want equity in the companies. The goal is only to build on St. Louis' long business history.

GINGER IMSTER, EXECUTIVE DIRECTOR, ARCH GRANT: Entrepreneurism in St. Louis has been here since beer and fur. This is the next phase.

ALTMAN: The competition is now in its third year and the startups range from consumer products - like a tattoo that lasts just six months - to a biomedical device that helps treat epilepsy.

What St. Louis offers - beyond the cash - is a growing network of startup incubators, co-working spaces and angel investors. And Imster says another selling point is that the city is not only friendly to entrepreneurs but affordable.

GRANT: They can find not only residential property that they can afford, but they can find commercial real estate that they can afford as well. So it makes growing a business here really not easy, but it makes it possible, and that's the difference between St. Louis and a lot of other markets.

ALTMAN: With a logo that pictures the Gateway Arch as a giant magnet, the competition does appear to be attracting more interest. Half of this year's 46 finalists are from out of state, four are from other countries.

Dane Stangler is vice president of research and policy at the Kauffman Foundation, a private group promoting entrepreneurship. He says other cities are paying close attention to what's happening in St. Louis.

DANE STANGLER: This idea of a competition to relocate, you know, as a tool for economic development is quite new, especially in the U.S. context. A couple of other countries have experimented with it at the country level, but it's on the leading edge.

ALTMAN: Still, Arch Grants officials know they have to sell some out-of-town entrepreneurs on putting down stakes in St. Louis.

On a recent sunny day, finalists took a whirlwind tour of downtown, from visiting startups in buildings with exposed brick walls to apartments offering great views.

Just out of college, Shanshank Sanjay and Jonathan Hubbard are eager to grow their social analytics marketing firm. Now based in New York City, they're downright giddy about St. Louis rental costs.

SHANSHANK SANJA: So awesome.

JONATHAN HUBBARD: It's so much better.

SANJA: So awesome.

HUBBARD: Yeah. So, so I mean currently in New York, I'm paying $900 and that's like me and one guy splitting a floor of a house, so I mean the pricing for two people here is like astronomically better.

ALTMAN: Arch Grants will announce the 20 winners of this year's competition tomorrow. That's when Sanjay, Hubbard and nearly 50 other entrepreneurs will find out whether they're they won the competition.

With that will come $50,000 and a quick call to a moving company to begin relocating their business here.